• Mon. Jun 27th, 2022

KAM statement on the prevailing economic and manufacturing conditions in Kenya

Apr 14, 2022

We are in no doubt facing difficult times occasioned by both global and local factors and our resilience continues to be tested, almost to the failure point.  

Kenya Association of Manufacturers (KAM) would like to raise concerns on five key challenges that are currently vexing us as a sector and country at large:

1.      Fuel Supplies 

It is now painfully clear that the fuel supply system, and in particular the subsidy program, has broken down, perhaps irretrievably so. As global oil prices have risen, the government’s capacity to subsidize has been revealed as woefully inadequate; not surprising as we are aware of the fiscal strain in government cash flows.

The lack of easily accessible fuel is a strain on our operations and a poor advertisement of Kenya’s ability to manage our national affairs. We are urging the government to abandon the subsidy system to enable stable supplies in the market and to suspend some of the taxes on fuel as an alternative mechanism to shield the country from the high cost of fuel. 

2.      Grain Supplies 

The impact of the invasion of Ukraine and the blockade of Black Sea ports is having massive consequences on the supply of wheat flour in the market. India is a quick alternative source. We are calling upon the Kenya Plant Health Inspectorate Service (KEPHIS) to fast-track necessary approvals as a matter of national food security. From ongoing engagements with our counterparts at the Cereal Millers Association (CMA), it is clear that maize shortage will be our next crisis, with supplies at dangerously thin levels. This is a matter requiring the highest level of attention before it spins into further crisis. The Association is engaging the government to avert the looming crisis. 

3.      US Dollar Availability 

Many of our members have had challenges accessing US dollars from their banks to meet their international commitments in a timely manner. This is putting a strain on supplier relations and the ability to negotiate favourable prices in spot markets. Liquidity in the market is critical to allow businesses to focus on their core activities of cost-efficient production and avoid panic buying. We are calling for the opening up and encouraging inter-bank trading to increase liquidity in the market. 

4.      Metal Sector 

I highlight the metal sector challenges here due to the scale and impact on adjacent sectors such as building and construction, automotive and energy among others. The complete ban on dealing with scrap metals is having a devastating impact on costs and supplies in the sector, and the sustainability of many companies that have literally shut down partially or completely. Whilst we support the government measures to improve the operations of the sector, we are calling upon them to incrementally re-open the sector to licensed operators, in order to revive this important sector. 

5.      The Finance Bill 2022 

As is now depressingly familiar, the published Bill has again been riddled with proposals that are unfriendly to both businesses and consumers, and at a very difficult time in the economic cycle – the mind boggles! We shall be vigorously defending our sector and consumers in the coming days in Parliament and on all our platforms. The Association is collating views on the Bill through our usual channels and we urge you to share your feedback at the earliest, as the Bill will be fast-tracked through Parliament. 

We are also in the electioneering season that will bring its own challenges, not least of which is the diversion of national focus from these key issues. We remain committed to continue beating our drums and encourage you to raise these issues and their possible solutions in all forums. 

It is our continuing belief that we have the capacity and capability to build a thriving manufacturing economy with the correct focus on the impediments to our growth. 

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